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The US has been very critical of India's nuclear liability law, and this is generally believed to be one of the major hurdles to the relationship.

NEW DELHI: The government's effort to find an honourable way around the constraint of the nuclear liability law without actually violating it ran into rough weather on Thursday with the opposition accusing it of seeking to dilute the law for the sake of US and other foreign suppliers.

The opposition seized upon attorney general Goolam E Vahanvati's opinion, as reported in TOI, that the country's nuclear operator NPCIL could waive the right to recourse to suppliers' liability in a commercial contract for a foreign-supplied nuclear plant, to allege that the government was seeking to dilute the provision in the nuclear liability law that would hold foreign reactor suppliers liable in cases of mishaps caused by faulty and defective equipment.

The government's decision that an early works agreement between NPCIL and Westinghouse could be cleared by the Cabinet Committee on Security without having to seek the nod of the Atomic Energy Commission was cited by the BJP and Left as evidence of government's desire to undo the liability law for the sake of American companies ahead of PM Manmohan Singh's US visit at the end of next week.

With BJP and Left alleging that the government would use the AG's opinion to waive the liability of foreign suppliers, the Department of Atomic Energy (DAE) clarified in a statement that there was no question of subverting Indian law.

"Foreign suppliers as well as domestic vendors have raised a number of queries with regard to the manner in which the Civil Liability for Nuclear Damage Act, 2010 and its associated rules will apply to their contracts. Since these queries involve questions of law, Department of Atomic Energy sought the opinion of the ministry of law and justice on these issues. This will be examined by the Department of Atomic Energy and NPCIL," DAE said.

Foreign minister Salman Khurshid on Thursday said the law and Parliament's approval remained supreme. "The protracted negotiations that have taken place between India, the US and commercial companies in the US have been for this reason that we have stood on our ground. We have said that whatever position Parliament has taken, there no question of retreating from it. We have been convinced, and have tried to convince the US negotiators that whatever basis we have of our agreement, there is adequate scope in that for them to get the protection that they legitimately deserve."

When questioned in 2012, the MEA too had held the view that the operator had the right to choose not to exercise the right to recourse, and thereby limit the liability for the supplier.

The US has been very critical of India's liability law, and this is generally believed to be one of the major hurdles to the relationship. The PM, who made the nuclear deal the centrepiece of UPA-1, has been wanting to fix the problems with the law, but the allegations of sellout underlined once again that he has only limited maneuver space.

The CCS is scheduled to meet on Tuesday to decide on the early works agreement with Westinghouse. This agreement, as reported by TOI, opens the way for detailed and confidential discussions between the two sides.

At the heart of the government's actions is this — the government's signature achievement, a nuclear deal, to enable India to access clean nuclear power by allowing foreign-origin reactors has come unstuck because of the provision in the law holding foreign suppliers liable.

"The government can do one of two things — keep the law's provisions and make nuclear power horribly expensive. Or lower the cost of entry for foreign players, while building strong safety mechanisms. We have chosen the latter," said an official close to the development.

The nuclear liability law, with its supplier liability clause, cooled the ardour of many countries who wanted to invest in India's nuclear energy sector. The US, France and Russia have all objected to Clause 17(B) and Clause 46 which together not only make it difficult for them to invest, but also exponentially raises the cost of nuclear power, which was not factored in by government managers when they were drafting the law.

India signed the Convention for Supplementary Compensation (CSC) in November 2010 but hasn't been able to ratify it yet, because its domestic law violates international regulations, which places the liability for compensation solely on the operator, in this case, NPCIL. There is no provision for supplier liability in the CSC. But the liability law has taken a strongly emotional hue, which, along with its declining political capital, has made it difficult for the government to return to Parliament to amend the law. Internationally, the government has been under fire for making it difficult for foreign companies.

The government codified rules and regulations to the law in November 2011, which stated that the liability would be limited to the period of the initial contract, that is, five years. The CPM's Sitaram Yechury raised an amendment to the regulations, but since it was not followed through, the amendment lapsed.

In 2012, the liability law ran into trouble with Russia. Russia refused to let the agreements for Kudankulam 3 and 4 be governed by the liability law. That would raise the price of the power produced to the extent that it would be priced out of the market. At the time too, Vahanavati had said, "Section 17(a) provides for recourse if such right is expressly provided for in a contract in writing. If the operator chooses not to incorporate such a provision in the contract, it would be open for him to do so."

Both Russia and France, who have started negotiations on nuclear plants with India, have indicated this would have to be legally watertight in any commercial contract.

The aim of India-US dialogue is that as India rises and seeks an adaptation of existing rules, it does so in a concerted manner with the US.
Kanwal Sibal

HTTP://WWW.TRIBUNEINDIA.COM/2013/20130922/EDIT.HTM#1

OUR ties with the US have improved remarkably. The number of dialogues that the two countries are holding — on energy, education, agriculture, health, development, science and technology, environment, trade, defence, counter-terrorism, non-proliferation and high technology — far exceed those with any other country.

The objective is to build Indian sectoral capacities with US technology and know-how, a process that would help India grow and provide the US greater opportunities in an expanding Indian economy.
The US position on India’s permanent membership of the UN has evolved positively, indicating that the US is inclined to open the strategic space that India claims for itself. The US has also committed itself to promoting India’s membership of the existing four non-proliferation regimes.

The US attaches importance to bilateral dialogue on global commons — air, space, sea and cyberspace. The aim is that as India rises and seeks an adaptation of existing rules, it does so in a concerted manner with the US. Freedom of navigation and securing the sea lanes of communication are areas where the US has particular interest in partnering India, given India’s dominating position in the Indian Ocean and the steady expansion of its navy.

Cybersecurity is a matter of urgent international attention and India’s emergence as a major IT power, along with the vast expansion of its telecommunications network, makes it a partner of choice to establish new rules of the game.
India’s defence ties with the US in the last decade signify greater mutual trust. In the last few years, the US has bagged orders worth about $9 billion, but it expects a greater share of defence procurements.

India is holding numerous joint military exercises with the US, especially elaborate naval exercises in the Indian Ocean area. These convey an important strategic message in view of massive trade and energy flows through these waters.
The US has described India as a lynchpin of its rebalancing towards Asia. China’s growing muscle-flexing requires the US to strengthen its presence in Asia to give confidence to its allies who may otherwise seek accommodation with China. Because of its attributes, the US clearly sees India as a vital partner in the years ahead.

India, however, is wary of this re-balancing strategy as it doubts the capacity and inclination of the US to contain China beyond a certain point because of the huge economic and financial interdependence between the two countries.
On the issues of terrorism and religious extremism, while bilateral cooperation in the area of counter-terrorism has progressed, the ambivalence of US policies undermines Indian interests.

The US decision to talk to the Taliban disregards India’s strong objection to any political accommodation with it without insisting on the red lines laid down by the international community. The US decision to leave Afghanistan in 2014 in conditions permitting an orderly withdrawal with the help of the Pakistani military creates a potential security problem for India.

The Iranian issue has created wrinkles in our bilateral relationship as US sanctions have interfered with India’s energy security, forcing India to reduce its oil intake from Iran quite drastically and blocking Indian investments in attractive long-term projects in the hydrocarbon sector in Iran.

The last decade has also seen a significant expansion of India-US economic ties, with trade in goods standing at $62 billion and the total exchanges amounting to over $100 billion, making the US India’s largest economic partner.
The prospects of nuclear cooperation with the US have dimmed because of our nuclear liability act. The US is pressing for signing a “small works agreement” between Westinghouse and NPCIL to register some progress to fulfil India’s commitment to order 10,000 MW of nuclear power from US reactors at two sites.

Other issues have contributed to a distinct lowering of enthusiasm for the India relationship in the US, such as perceived Indian protectionism exemplified by our Preferential Market Access decision to force foreign companies to set up manufacturing facilities in the telecom sector; Supreme Court judgment on the patents issue which has exacerbated concerns about IPRs; and retroactive application of tax legislation as in the Vodafone case. The US corporate mood towards India has soured, and this needs to be reversed.

The US is pushing for a Bilateral Investment Treaty. On climate change and WTO issues, India and the US have differences.
On the Indian side, we have problems with the new Comprehensive Immigration Bill that will put more restrictions on the movement of personnel from India to the US in the IT sector, the increased cost of H1B and L1 visas that will impose sizeable costs on the Indian IT sector.

The general view is that the relationship is now suffering from the fatigue factor.
Prime Minister Manmohan Singh and President Barack Obama will be grappling with these issues when they meet shortly.
The writer is a former Foreign Secretary of India.

Another day, another calamity: thirty killed by a suicide bomber at a funeral in Quetta; the commanding General in Swat blown up by Pakistani Taliban; renewed Indo-Pakistani fighting along the Kashmir border threatens to torpedo fragile reconciliation efforts. These events—all in the past six weeks—reinforce recent disclosures in the Washington Post confirming deep-seated official US doubts and fears about Pakistan. Taken together, they constitute an inflection point: it is time to re-examine the entirety of our ties with that duplicitous, nuclear-armed and unstable country

Another cycle of Foggy Bottom delusion will soon begin, as Pakistan moves to capitalize on an Afghanistan from which America is mostly absent. In policy terms, dealing with Pakistan resembles “Groundhog Day”—a dismal recurring cycle of action/reaction, with hopes recurrently dashed.

Whether it is the unhappy fate of a Pakistani doctor helping track down Osama Bin Laden, retried after winning an appeal; or predictably resumed skirmishing in Kashmir—all lead inevitably to grave doubt. Every week, U.S. and other policymakers voice a silent question: "Why Pakistan?"

Why Pakistan?

As a thought experiment, it’s a question worth asking, because there’s nothing inevitable or firmly grounded about ‘Pakistan’ at all. Imagine for a moment that Pakistan and Afghanistan did not exist as separate states. Consider instead what might have happened had a decolonizing British India devolved into countries with the same culture/ethnic basis as in Europe.

British imperialism was skilled at manipulating ethnic divisions in south Asia, but in 1947, it choose instead to act as midwife to an artificiality based on religion rather than ethnicity, thereby spawning via a bloody Partition a new state named ‘Pakistan’ (‘Land of the Pure’) in which an inherently implausible gaggle of Bengalis, Sindhis, Punjabis, Baluchis, and Pashtuns found themselves lumped together.

It was a fateful choice. If the British had instead used the same culture/language/ethnicity criteria for states as done in Europe, would Pakistan exist? Instead of Pakistan and Afghanistan. we might have ‘Pushtunistan’, ‘Baluchistan’, and even a 'Sindhi Nation' around Karachi. Afghanistan's Tajiks and other minorities might also have melded with a future Tajikistan, Uzbekistan, and Turkmenistan, while the residual India would have rested on a core inclusionary civilization. Ironies abound: More Muslims live in India than in Pakistan.

Yet we must live with the baleful consequences of the Great Error in 1947. But with only the slender reed of religion, we shouldn’t be surprised, especially given Salafi and jihadi money from the Gulf States flowing into Pakistan. Nor should we be surprised by a spreading Sunni-Shia proxy war spreading across the Greater Middle East, from North Africa to Pakistan.

If prevailing Southwest Asian realities had rested instead on a cultural/ethnolinguistic foundation, it would still fall well short of being a region of peace and harmony. But feuds and clashes would have remained local. We would not have to worry about a neighborhood dispute like Kashmir being a potential trigger for nuclear conflict.

Barely a week passes without some ghastly massacre in Waziristan, Karachi, Quetta, or even in the Sindh. Despite more than $20 billion in U.S. aid since 2001, Pakistan ranks #13 on Foreign Policy magazine’s Failed State Index, 'edged out' only by such wonders as Somalia, Haiti and Zimbabwe from descending into still more humiliating status.

More than sixty years after Partition, large swathes of Pakistan’s territory remain outside central control. It ranks 113th of 120 countries in literacy, with a combined men’s and women’s rate of 55 percent. In over seventeen thousand madrasahs, mushrooming in part because of the collapse of public education, over three million young men study little beyond the Koran. Despite its boomerang effect, Pakistan’s intelligence and security establishments can’t wean themselves off using terrorist groups for political goals, as in Afghanistan and Kashmir, even though the dog bites its master, time after time.

Most of this lies well beyond our ability to influence or control. Yet, the most delusional of these failures plays out far from South Asia, as one U.S. administration after another has continued to pump in money, hoping against hope that things may improve. It has led to long-term cash commitments for short-term needs like keeping the Afghan supply “pipeline” open.

Pakistan long ago lost interest in America’s longest war. Whatever sweet noises its latest leadership makes, Pakistan makes sure that our enemies in Afghanistan remain its friends. In our respective careers in government, we’ve found few who know, or can even explain, why American, Australian, British and other country personnel continue to die in Afghanistan from actions traceable back to Pakistan.

With the recent return to power of Nawaz Sharif, we are now seeing another round of delusional moves to square this resolutely round circle. A former American ambassador to Pakistan writes in a recent Asia Society paper that “new people can bring new energy to a relationship." Cameron Munter cites a "new President," a "new Chief of Army Staff" and a "new Chief Justice of the Supreme Court” as hopeful signs, mentioning that a 'new' prime minister will soon come to Washington. The "question for Americans,” he says, “is how best to help, find common cause, and define common actions.”

No, there is no such question. There is no corner to turn. Damage limitation, not common cause, is the only choice. Pakistan’s retort, 'don't let us fail,' has been repeated down the years and well before 9/11.

As to Islamabad’s future, survey South Asia specialists and the consensus view is that the best to expect is simply that chance that Pakistan’s elite can stay afloat. Option B—‘muddling through’ rather than either moving toward a modernized society or slipping towards total collapse’—is the most prevalent view.

Pakistan’s habit of holding implicit threats (loose nukes or more transnational terrorism) over our heads while suggesting that these might abate, if only a little, by our keeping the money spigots open and flowing. Up to now, we’ve acceded to this game, sending more good money after bad.

It is time to rethink the entire relationship. Pakistan needs to understand that actions have consequences. Their failings and shortcomings are their own. It makes sense to broadly offer open markets and investment, and moving forward on a robust bilateral investment treaty. Beyond that, have a nice day. If China wants to take charge, that’s okay by us—India’s vision for southwest Asia looks a lot better than a return to Kabul’s status quo ante before 9/11.

Breaking decades of implicit blackmail by Pakistan—from its insanely prolific nuclear-weapons production to its stable of semicontrolled terrorist groups—means learning to say no, both to the Pakistanis themselves and to their apologists and fantasists in Washington.

If U.S. policy can begin to make that refreshing turn, then we can begin to cease being delusional about one of the world’s most delusional states. For U.S. policy, the proper maxim must be 'less is more.' For starters, cease feeding the beast with military aid.

This is not an argument for complete disengagement but, rather, a plea to turn the page. We should put focus on market access so Pakistan can encourage its brightest people to expand light industry and assembly and compete in the global knowledge economy. China’s labor advantage is disappearing, and a more competitive investment environment in Pakistan stands a fair chance of being rewarded.

We are at a crunch point now. As the next Afghan chapter plays out, absent a large-scale U.S. presence on the ground, Pakistani behavior will almost certainly thwart a stable, non-terrorist threatened Afghanistan, part of Pakistan’s phobia about India’s plans for Central Asia. After America leaves, Afghanistan will become inevitably an object of heightened Indo-Pakistani competition. Indian objectives in Afghanistan are modest, seeking to engage Kabul economically, bolster stability and offset Pakistani hegemony. But Pakistan, structurally, cannot move away from its beggar-thy-neighbor approach. It’s all it knows.

This soon-to-unfold scenario only serves to underscore the limits of any serious overlap of interests between Washington and Islamabad. A scaled-back and less pretentious relationship offers us more latitude—if we can give up our own delusions.

Robert A. Manning is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council. He served as a senior counselor to the UnderSecretary of State for Global Affairs from 2001 to 2004 and a member of the US Department of State Policy Planning Staff from 2004 to 2008.

James Clad is a former Deputy Assistant Secretary of Defense for South Asia.

Without setting the parameters for what exactly is the state willing to concede to the TTP in exchange for peace, the prime minister and his APC have left the door wide open for the terrorists to keep making highly perverse demands

The Tehreek-e-Taliban Pakistan (TTP) has claimed the killing of Major General Sanaullah Khan, GOC Swat Division, along with Lt-Colonel Tauseef and Lance Naik Irfan Sattar in an IED bombing in Upper Dir on Sunday. In a statement released a day after the attack, General Ashfaq Pervez Kayani said that while peace must be given a chance through the political process, no one should have any misgivings that “we would let terrorists coerce us into accepting their terms” and that “the military has the ability and the will to take the fight to the militants.” Frankly, there is little in the general’s almost decade-long track record at the helm, first as the ISI director and then as the army chief, to suggest that he would deliver on his pledge, especially with one foot out the door. General Kayani, like the politicians who signed the September 9 declaration of the All Parties Conference (APC), did not deem it necessary to even name the enemy that he intends to take the fight to.

Of late the Pakistani media is abuzz with the claims that the Pakistan army wishes to fight the Taliban while the politicians lack such resolve. The fact is that the army has been ceding territory to the jihadists of assorted varieties for about 10 years now. And wherever and whenever it has acted against the terrorists, it has done so reluctantly and after dragging its feet not for days or months but literally years. The Swat operation is often cited as a success story and also to show that the-then ruling Pakistan People’s Party (PPP) and the Awami National Party (ANP) wanted to negotiate with the TTP while the army wanted to act decisively. The reality however is that the TTP takeover of Swat happened over at least two years while the mullahs governed the Khyber-Pukhtunkhwa and the army chief General Pervez Musharraf ruled the country. The PPP-ANP coalition was forced into negotiating with the TTP when the army — the only fighting force they could rely on — was gun shy when it mattered the most.

Consider the much-trumpeted Rah-e-Nijat operation in South Waziristan Agency. The operation was announced some six months before the action actually started in October 2009. Stealth and caution were both thrown to the winds. As expected, the Taliban did not stay and fight pitched battles and simply melted away into their hideouts in the neighbouring North Waziristan Agency (NWA), Orakzai Agency and Balochistan. Media fanfare surrounding the Pakistan army’s incursion into and conquest of Kotkai — the hometown of the TTP head honcho, Hakimullah Mehsud — sounded then as if the Allies had descended upon the Führerbunker. Only there was no Hakimullah there. Fast forward four years almost to the date and the TTP chief is dictating terms to a nuclear-armed state! It is indeed somewhat surprising that almost all top TTP leaders from Nek Muhammad Wazir and Baitullah Mehsud to Wali-ur-Rehman escaped alive from the Pakistan army operations. They were all killed in the much-maligned drone attacks.

The simple point is that if the Pakistan army wished to build a case against the TTP it could have done much better than the six-monthly speeches that General Kayani delivers about the internal threat being the pre-eminent danger without naming names and ever pointing a finger. Sheer incompetence, of course, cannot be conclusively excluded but it is hard to believe that with its tremendous wherewithal, including a whole division of media men and women that virtually raised hell about the PPP’s attempt to bring the ISI under civilian control, the Kerry-Lugar-Berman Act and the Memogate matter, the army failed to capture and mould the narrative to fight against the TTP. There is little doubt, at least in the minds of many in Khyber Pakhtunkhwa and FATA, that the army did not wish to take on the Taliban for various reasons. The three primary reasons being: a) the military establishment’s plans for the ‘endgame’ in Afghanistan; b) concerns about the domestic terrorist fallout that might not be manageable, especially in Punjab province; and c) the army’s rank and file lacking the will to fight the jihadists they have supported for decades. Additionally, when the army-friendly media machine went into overdrive to build the image of the pro-Taliban/negotiation Imran Khan, many other leaders took it as their cue to hop onto the dialogue bandwagon.

Nonetheless, what Prime Minister Nawaz Sharif has presided over in the name of an APC is nothing short of a humiliating collective capitulation to the TTP, which has been rechristened as ‘stakeholders’ in the declaration that reviles NATO, the United States and its drones as the cause of terrorist evil in Pakistan. It merely shows how delusional, hypocritical and cavalier the political leadership is. Mr Khan might be naïve about the TTP being amenable to unconditional talks but Mr Sharif is most certainly not. By letting Mr Khan and his ilk virtually hijack the APC and dictate its outcome, Mr Sharif has virtually offered the TTP a velvet fist in a velvet glove. States, especially those brandishing nukes at the drop of a hat, do not negotiate with terrorists. The Irish Republican Army (IRA) model cited by some is a false analogy. The IRA subscribed to everything that a modern state stands for while the TTP rejects everything that is modern.

Without setting the parameters for what exactly is the state willing to concede to the TTP in exchange for peace, the prime minister and his APC have left the door wide open for the terrorists to keep making highly perverse demands. Drone strikes and the US presence in Afghanistan may end soon but the TTP would certainly find another pretext to continue its violent campaign. The TTP’s negotiations ruse has always ended in more bloodshed and there is little reason to believe it would be different this time. Mr Sharif might have thought that sharing responsibility with other leaders would help build consensus for action if/when the talks fail. But chances are that like the TTP, its apologists too will come up with yet another justification for continued terrorism when drones and the US are out of the picture. After all, it previously was the Palestine and Kashmir problems that the jihadists used as a license to kill and their apologists for blaming the US and others.

The TTP has clearly brought the Pakistani state down to its knees. Unless the army and the political leadership stop deluding themselves, this learned helplessness will only get worse.

September 20, 2013

In cancelling her state visit to the United States on account of the National Security Agency’s spying excesses, President Dilma Rousseff of Brazil has taken a principled position that most leaders around the world have shown little appetite for. While every major power affected by the NSA’s intrusive surveillance programme — with the honourable exception of Germany — has gone out of its way to brush U.S. highhandedness under the carpet, Brazil has expressed its displeasure at the highest diplomatic level. Ms Rousseff’s state visit, originally scheduled next month, would have been the first by a Brazilian head of state to Washington, D.C. in nearly two decades. Evidently, the symbolism attached to it meant little for the President in the face of allegations that her office, and other institutions, including Brazil’s largest company Petrobras, had been bugged by the NSA. That these revelations follow the arbitrary detention of David Miranda — the Brazilian partner of journalist Glenn Greenwald who published the NSA leaks — by British authorities at Heathrow has alienated her government further. Former President Lula da Silva suggested in an interview to The Hindu that U.S. President Barack Obama “must apologise” for the NSA’s snooping. The Rousseff administration is even mulling “relocating” to Brazil its citizens’ data hosted by major U.S. companies.

Compare this commendable response to that of India, another emerging power which, like Brazil, has enjoyed cordial ties with the United States. India too was affected by the NSA’s schemes: it is now on record that our embassies, government leaders and ordinary citizens were spied upon. When NSA documents were made public, Foreign Minister Salman Khurshid sought to justify the Agency’s conduct as commonplace. And where Ms Rousseff chose to cancel her visit, there are indications that Prime Minister Manmohan Singh might end up making concessions on a host of issues that are of great concern to American businesses when he meets with President Obama on September 27. The Hindu earlier reported U.S. attempts to get India to phase out refrigerant gases under the Montreal Protocol. Apart from pressing for speedier progress on the purchase of American nuclear reactors, the Obama administration is also likely to demand protection for American patents in the pharmaceutical and renewable energy sectors over and above that required by Indian law. Prime Minister Singh need not call off his visit à la Rousseff; but the least he could do is to publicly register India’s anguish at NSA’s spying, while buffeting U.S. attempts to wrest uneven concessions on the economic front.

The high cost of power from US nuclear reactors India has proposed to buy is proving to be the biggest hurdle to pursuing nuclear trade negotiations with Washington, with the upper price limit calculated by the Department of Atomic Energy being almost twice the price finalised with Russia for Kudankulam units 3 and 4.
Related: Britain lobbies for nuclear export group NSG to admit India

Based on the talks so far, the upper limit calculation — essentially the maximum price per megawatt before negotiations — is Rs 38.76 crore per MW, which works to Rs 12.19 per KWH for the consumer. This, sources said, is way higher than the recently negotiated price with Russia, which is about Rs 22 crore per MW, translating to about Rs 6 per KWH for the consumer.

Related: India, S Korea discuss space, nuclear ties

Even though the Nuclear Power Corporation of India Ltd is yet to begin price negotiations, there were concerns over signing a preliminary agreement without getting a clearer picture on how far the prices could be reduced.

The exchange value is pegged at Rs 67 to a dollar as of now for the purpose of this agreement, which has been moved as a Cabinet note and would be taken up by the Cabinet Committee on Security soon.

One of the reasons for the cost being so high is India's civil nuclear liability law and its requirements, which has raised insurance costs for all nuclear power firms doing business with India. American companies are being overcautious to ensure that they do not lose out due to some litigation as has happened to some US firms.

As a result, the preliminary agreement, which is worth just Rs 102 crore, leaves out reference to any contentious issues. In fact, the DAE has made it clear that the agreement will lead to no nuclear activity and more importantly, has emphasised that liability issues will only be dealt in the main contract.

From what has been proposed, the agreement is clearly just symbolic to convey India's intent to stay the course on the India-US nuclear deal. It commits both sides to carry out a preliminary safety analysis, a second technical assessment, design review and assess design compatibility with Atomic Energy Regulatory Board codes, electrical aspects and holding technical training workshops.

The main problem, however, remains the cost of the project, which is to come up at Mithivirdi in Gujarat. At present estimates, the cost of the project to set up two units of Westinghouse's AP-1000 reactors is over Rs 92,000 crore, up from Rs 60,000 crore estimated in 2009.

The plan is to ultimately have six reactors at the site. But clearly a lot of the spadework still remains to be done before the project can take off even though land acquisition has moved fast with the public hearing also completed from the environmental end.

September 18, 2013

Whenever I see manmohan singh and today's India's economic situation, it reminds me of a joke which ex US President Ronald Regan told to ex fed chairman alan greenspan. I first burst into laughter when i read it, but as i realize the depth and seriousness behind it, chill goes down my spine.

As the joke goes: in earlier USSR Comrade Brezhnev was observing the annual military parade at red square. first came the army, then commandos, then navy followed by airforce, then tanks followed, later missiles. And now program was about to end then only spectators found a bizarre scene. After the missiles a bunch of civilians was following the missiles, they were extremely shabby looking, without any military drill, looking here n there, waving hands to spectators. They were looking so odd. All the fellow comrades got cold feet. They knew there ass is going to get kicked. One of them hurriedly went to Comrade Brezhnev "forgive me sir, but i really don't know how these guys managed to get in. Pls give me some time, i ll find it and let you know. Brezhnev calmly told them, don't worry i have specially invited them to be a part of the parade. They are our most talented economists and my most lethal weapon. (Once penetrated in the enemy country) you don't know what damage they can do.

Our fureeen ( Foreign) return talented economist PM. Mr,Manmohan sing is our economic hitman. Ha ha ha !
On a serious note, when Shankar Sharma left the stock market then only I realized crisis in congress is far deep, its just a matter of time before it comes out open.

Yesterday, India jubilantly tested the long-range Agni-V ballistic missile for the second time, en route to the missile’s induction into the Strategic Forces Command in several years. But trouble looms on India’s borders. In the recent monsoon session, Defence Minister A.K. Antony stood before Parliament to defend the government against the charge that it is permitting Chinese encroachment along the border and Line of Actual Control. Ground realities are difficult to discern from New Delhi, but much of the Indian media seems fearful that the Chinese are winning a slow border game of chicken. To the west, Pakistan Prime Minister Nawaz Sharif continued to make conciliatory noises towards Delhi while also chairing a National Command Authority meeting, which affirmed its support for “full spectrum deterrence”.

To deal with this rough neighbourhood, India has embarked on an ambitious military modernisation programme. Indians have triumphantly witnessed progress on a nuclear ballistic missile submarine, the Arihant, whose reactor recently went critical; watched the aircraft carrier Vikrant set off from dry dock; cheered news of the successful Agni-V test; and learned of political clearance to raise a Mountain Strike Corps in the east to be headquartered at Panagarh. Each of India’s three armed services is moving to modernise itself.

But can India afford it all? The defence budget for 2013-14 grew by 5 per cent over the previous year, with defence capital acquisitions growing by 9 per cent. But, with inflation averaging more than 5 per cent since February, and the rupee depreciating by 14 per cent against the dollar over the same period, that modest nominal budget increase is actually a real budget decrease for defence. In a time of austerity, strategic planning is about prioritisation. How should India prioritise its future military modernisation to meet its envisioned security requirements? Each of the three services can claim urgent need.

First, there is the Indian Air Force. Saddled with an ageing, shrinking set of fighter aircraft and a stalling deal to buy France’s Rafale, the IAF desperately needs an infusion of modern fighter aircraft. While the Sukhoi-30 MKI is an incredibly capable aircraft, and India plans to ultimately acquire 272 of them, one fighter alone cannot meet the full range of India’s needs and mandated squadron strength. Despite high hopes, the Medium Multi-Role Combat Aircraft (MMRCA) deal with Dassault for its Rafale jets appears to be sputtering. Between French cutbacks in production and the falling rupee, it is an open question whether Dassault can live up to the terms of its lowest price bid. The IAF’s joint development with Russia of a fifth-generation fighter, the Sukhoi PAK FA, is still in the early phases of development. That leaves India still relying on obsolete MiG-21s— in service for 50 years, with an increasingly abysmal safety record — as the backbone of its fighter strength. The IAF is similarly strained on transport and close air support capabilities.

While the air force struggles to replace obsolete platforms, the navy has launched an ambitious expansion plan of its surface and submarine fleet demanding significant capital expenditures. The half-decade process of developing and arming the Arihant and Vikrant is only beginning. But to have a fully operational nuclear deterrent at sea, India will need at least three nuclear submarines — at an estimated $3 billion each, not including the cost of developing the submarine-launched ballistic missiles. Similarly, the Vikrant will need time in port for maintenance and refitting. To keep up its forward naval air presence, India will need to complete the Vikrant’s bigger sister ship, the Vishal, and finalise the painfully expensive, long-delayed acquisition of the aircraft carrier Vikramaditya from Russia.

The army has its own ambitions for replacing and expanding capabilities. The recent clearance to raise a Mountain Strike Corps will cost an estimated Rs 65,000 crore. Meanwhile, the army is in the process of fully upgrading India’s main battle tank to the Russian T-90, even as it upgrades the army’s attack-helicopter fleet and basic infantry, artillery, and armoured equipment. The army still has to decide where to hide its indigenous Arjun tank, which it has never been excited about but had thrust upon it by the DRDO. If the goal is indeed to be capable of waging offensives simultaneously on India’s western and eastern fronts, the army still has a long way to go.

None of this will be cheap. So can India afford to simultaneously modernise all three services at its current pace?

This debate between competing services and strategic visions will be a painful one, but it must be had. All countries have difficulty picking winners and losers among services. It’s always tempting to spread the wealth around. But doing so can carry very real costs. Instead of a clear-headed strategic rationale for investment, driven by a vision of its future strategic posture, India might find itself under-equipped in all three services — and dangerously vulnerable. India’s civilian defence managers are particularly ill-equipped to make strategic choices, with many senior officials appointed to the defence ministry with no prior national security experience.

Choosing among weapons systems and services requires making bets about India’s future security landscape and determining what sort of wars India may have to wage in future. For example, is India’s future security best obtained with a strong land and air force, or does it make sense to invest heavily in naval capabilities, where India presently has an advantage, but which could pit it against a growing PLA Navy and lead to a potentially expensive naval arms race? Can India best deter China by developing a capability for land grabs along the border or by threatening China’s maritime trade? Can India best deter Pakistan with the capability to attrite the Pakistan army or with the capability to strike deep into Pakistan’s heartland?

No single service can answer these questions, and the military cannot do so without civilian guidance. But India’s services are so stove-piped, and its civil and military leaders so sharply divided, that South Block cannot ask such questions, let alone answer them. Until real defence reform occurs in India, military modernisation in a time of austerity will just mean less of the same.

Christopher Clary and Vipin Narang

Clary is a Stanton Nuclear Security Fellow at the RAND Corporation. Narang is assistant professor of political science at MIT

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